… is from page 42 of the original edition of the Harvard economist Frank Taussig’s 1915 volume, Some Aspects of the Tariff Question:
In creating and maintaining the comparative advantage which comes from the better application of the machine processes, the business man – the industrial leader – has become in recent times a more and more important factor. The efficiency of the individual workman has been much dwelt on in discussion of the rivalries of different countries: aptitude, skill, intelligence, alertness, perhaps inherited traits. No doubt qualities of this sort have counted in the international trade of the United States, and still count. The American mechanic is a handy fellow, – it is from his ranks that the inventors and business leaders have been largely recruited, – and he can run a machine so as to make it work at its best. But there is a steady tendency to make machinery automatic, and largely independent of the skill of the operative who runs it. The mechanics who construct the machines and keep them in repair must indeed be highly skilled. Once, however, the elaborate machine is constructed and kept in perfect running order, the operative simply needs to be assiduous. Under such circumstances the essential basis of a comparative advantage in the machine-using industries is found in management, – in invention, rapid adoption of the best devices, organization.
DBx: Yes.
It’s worthwhile to highlight two features of the above quotation, which – don’t forget – was written more than a century ago.
The first is that Taussig recognized, as a matter of course, that comparative advantage can and does change through time. Free-trade supporting economists, such as Frank Taussig, have understood for a very long time that comparative advantage, in real-world modern economies, is not exogenous, but largely endogenous. So people such as Oren Cass and Michael Lind are mistaken when they assert that the case for free trade today is weak because, in today’s world, comparative advantage isn’t exogenous. People such as Cass and Lind are mistaken also to paint free-trade-supporting economists today as building our case for free trade on the assumption of a fixed and unchanging pattern of comparative advantage, as if we are somehow unaware of what economists understood and wrote decades ago.
The second thing about the above quotation to note is that Taussig recognized that private enterprise – entrepreneurship – has long been a driving force in steering, through market forces, the changes in America’s comparative advantages. Although Taussig was more open to the argument for infant-industry protection than are most economists today, he did not believe that the only, or only sound, source of changing comparative advantage is a protectionist government. Quite the contrary,
